NIKE shares rose the most in a year after the world’s largest maker of athletic gear beat first-quarter earnings estimates, helped by higher prices and a lower tax rate.
Profit rose to $1.34 a share, excluding some items, the Beaverton, Oregon-based company said on Thursday in a statement. Analysts estimated $1.19 on average, according to data compiled by Bloomberg.
CEO Mark Parker, who was tapped this year to succeed Nike co-founder Phil Knight as chairman, has expanded the shoemaker’s offerings of women’s apparel and bolstered its online operations. The company also increased its gross profit margin last quarter, with help from higher selling prices and benefited from broad-based revenue growth. Nike’s effective tax rate was 18.4%, compared with 21.7% a year earlier.
“They’ve had a really nice run,” said Rob Plaza, an analyst at Key Private Bank. Investments the company have made in cutting production and distribution costs are paying off, and expanding the gross margin has been “a big driver of the stock”.
The shares rose as high as $125.20 on Friday in New York, the largest intraday gain since September 26 2014. Nike had already climbed 19% this year through Thursday’s close.
Futures orders
Worldwide futures orders rose 17%, excluding the effects of foreign currency exchange-rate fluctuations. Analysts estimated a 10.1% gain, according to data collected by Consensus Metrix. The measure is closely watched because investors view it as a proxy for future sales.
First-quarter net income rose 23% to $1.18bn, or $1.34 a share, from $962m, or $1.09, a year earlier. Revenue climbed 5.4% to $8.41bn in the period, which ended August 31. That beat analysts’ $8.22bn average estimate.
Mr Parker has solidified his role this year as successor to Mr Knight and the company’s long-term steward. In June, Nike said that the 77-year-old Mr Knight had recommended that Mr Parker succeed him as chairman when he steps aside, which the company said was expected to happen in 2016.
The growth of futures orders in Europe, China, Japan and emerging markets also topped analysts’ projections last quarter. That’s soothed shareholders, who have seen shaky overseas economies and currency fluctuations threaten sales. They rose 27% in China, excluding currency, almost double the estimated rate.
Investors can breathe “a sigh of relief with the futures orders,” Mr Plaza said.
